Executive Decision Making at General Motors

Executive Decision Making at General Motors

David A.GarvinLynne C. Levesque

indexIntroⅠ. Alfred Sloan’s GM : Revving up Ⅱ. Coasting Toward CollisionⅢ. Getting Back on a Common TrackⅣ. ASB : The matrix in actionⅤ. The Future of GM’s Basketweave

StructureComments

Intro

• 1908 설립• 1904-1920 태동 (B.Durant) by 인수합병• 1920-1950 구축 (A.Sloan) • 1960-1980 위기 (1980 년 7 억 6 천만 $ 적자 )• 1980-1992 잘못된 구조조정 (R.Smith)• 1992-2001 새로운 GM(J.Smith)• 2002 대우 인수 , 안정기

지엠의 리더들• Durant• J.Smith• R.Smith• R.Wagoner• Larry Burns

Ⅰ. Alfred Sloan’s GM : Revving up

• 1908. Billy Durant 설립- 첫 번째 자동차 재벌그룹 ( 복합기업 )

- 산업내에서 첫 번째 수직통합형 회사 (by. M&A-25 개의 회사들 )=>GM culture : internal competition,

duplication were tolerated and en-couraged

1920 Alfred P. Sloan,Jr. 임명

1. Strategy1) Pricing pyramid “a car for every purse and purpose”

1. Strategy2) Commitment to innovation -annual vehicle changes -high compression -overhead value v-8 engines -premium gasoline -chrome tail fins -fully automatic transmission -new financial product ‘General Motors Ac-

ceptance Corporation subsidiary’

1. Strategy3) International diversification1925 began to exporting cars purchased ‘Vauxhall’-British vehicle

firm1929 ‘Opel’-Germen operation1931 ‘Holden’-Australia firm

achievementsMore than one-half of the vehicles sold in USA

The first Fortune 500 ranking

1956 the first company to net more than $1 bil-lion

2. StructureMultidivisional structure Divisions aggregated into groups. -new one in American business - reduced the nuimber of direct re-

ports to the CEO ->CEO to focus on guiding the broad

policies of the enterprise

2. Structure①Management Committee role: ultimate responsibility -resource allocation -spending authorities -planning GM’s future resided member: the top officers of the company except Group executives②Policy group -policy setting -supporting decision-making

Multidivisional structure

*to maintain a delicate balance*M.C., P.G ->Coordinated control in the decentralized organization

3) Policy and Decision-Making Process

P.Gs 달마다 표준과 정책결정 위해 모임 -plant design, specifications, new technologies,

grades for materials, labor contracts, HR pay policies...

-No formal authority but, expected to carry out the policies set

Senior managers, Sloan 미팅 참석 , 반대의견 등 논쟁 유도->Senior manager 들을 더 넓은 이슈로

3) Policy and Decision-Making Process

• As profit centers, the division devel-oped their own plans and forecasts

• Hall mark of Sloan’s GM• Analytical decision making at all

management levels • “the figures did not give automatic

answers to problems” • ->ROI 등으로 성과 측정

Results • 수익증대• Balance 위해서는 환경변화 필요

• Senior Manage-ment

“horns of a delemma”

새로운 조건에 닿기 위해서 관리 필요고위관리자가 분리된 이들을 관리하려 노력하는 희망없는 직위 되지 않도록

Ⅱ. Coasting Toward Collision• 1960s~1990s• 환경변화 ①increased competition ②tighter governmental

regulation&standards ③proliferation of car models and plat-

forms-1970’s oil crisis -> fuel-efficient car but, 빠른대처하지 못함

1. Strategy• 부적절한 대처→homogenization of cars across the

divisions ≫brand confusion• Revenue 보다 cost 에 집중• Arrogance and insularity• What was good for our country was

good for General Motors, and vice versa

2. Structure• In the 1960s, 1970s• Cost and product proliferation →more centralized assembly division• But, not enough• Because of changes in vehicle structure• Changes+lack of cost competitiveness =new organization with two car group (a dacades later)

BOC(large cars)

Cadil-lac

BuickOldsmobile

CPC(small cars)

Canada

Pon-tiac

Chevrolet

3. Policy and Decision-Making Process

• 1980’s reorganizaion• →slowed down decision making by adding a new layer of required review • P.G.-recommendingCompanywidePoliciesTo supportParticularpositions

Existing divisional management review-Lining up needed votes before meetings-Arguing over transfer prices and over-

head allocaions-Attending pre-meetings to eliminate sur-

prises at the regular meeting

3. Policy and Decision-Making Process

Larry BurnsWagoner ≫ 문제 있다 !!Jack Smith

• 1990’s “dinosaur” “death spiral” “inexorable decline”

Ⅲ. Getting Back on a Common Track

• 1992 and Beyond• 1992 J.Smith as CEO• P.G 없앰• 2 개의 Vehicle groups 폐지• M.C→five member president’s Coun-

cil• Reduced the corporate staff• Closed the executive dining room

1. Strategy• Market share ↓↓• To overhaul processes• Reduce overlapping product lines• Eliminating similar• Often competing• Models• Developing common Sys. For product manufacturing,

design and development• Speeding up• Bringing more discipline to the Decision Making Process• Streamling the bureaucracy• Eliminating the interdivisional competition

2. Structure• Restructuring!• ⅠⅡⅢⅣⅤⅥⅦ①②③④⑤⑥⑦• ∴• →≫↓

What’s ASB?• You win by knowing when to push a

little more global, and when to push a little less global. That’s the “race to the middle” and it’s a tough assign-ment.

• -G.Richard Wagoner,Jr.• Matrix organization(J